Dec. 7 (Bloomberg) -- The U.S. labor market withstood the
impact of superstorm Sandy as job growth exceeded forecasts in
November and the unemployment rate declined to the lowest since
December 2008.

Employment climbed by 146,000 following a revised 138,000
increase in October that was less than initially estimated,
Labor Department figures showed today in Washington. The median
forecast of 91 economists surveyed by Bloomberg called for a
gain of 85,000. The unemployment rate fell to 7.7 percent as the
labor force shrank.

The improvement in hiring bodes well for the holiday
shopping season and indicates Americans will keep up the
spending that makes up 70 percent of gross domestic product.
Coupled with improvements in housing, the report indicates the
economy will be better placed to weather federal budget cuts and
tax increases that may occur next year even if lawmakers agree
on reducing long-term budget deficits.

“There is some decent momentum in the economy now, which
we’re going to need coming into next year when one way or
another there is some amount of fiscal drag,” said Jerry
Webman, chief economist at New York-based OppenheimerFunds Inc.,
which has $186 billion in assets under management. “This is
modestly encouraging.”

Stocks rose for a third day as optimism over the jobs data
overshadowed a drop in confidence. The Standard & Poor’s 500
Index climbed 0.3 percent to 1,418.07 at the close in New York.
The yield on the 10-year Treasury note rose to 1.63 percent from
1.59 percent late yesterday.

Consumer Confidence

Another report today showed confidence among consumers fell
more than forecast in December as Americans’ expectations
slumped to a one-year low. The Thomson Reuters/University of
Michigan preliminary consumer sentiment index decreased to 74.5,
the weakest in four months, from 82.7 in November. Economists
projected a reading of 82, according to the median estimate in a
Bloomberg survey.

Estimates for the increase in November payrolls ranged from
15,000 to 145,000 after a previously reported 171,000 gain in
October. The revision for October reflected a 51,000 drop in
government jobs.

Private payrolls, which exclude government agencies, rose
147,000 in November. They were projected to rise by 90,000, the
survey showed.

An early Thanksgiving may have boosted payrolls by about
75,000 last month, according to projections by UBS Securities
LLC, as companies such as retailers took on extra staff sooner
than normal.

Holiday Hiring

Businesses that stepped up holiday hiring include Macy’s
Inc. The second-biggest U.S. department-store chain said it
would add about 2,000 more seasonal workers than the 78,000 it
hired last year. Toys ‘R’ Us Inc., the world’s largest toy
retailer, reported plans to employ 45,000 temporary staff, up
5,000 from the 2011 season.

A rebound in housing is boosting sales at furniture makers,
some of which are adding workers to keep up with demand.

“We have a sense of much more positive momentum heading
into next year than we did at this time last year,” Alan Cole,
president of Martinsville, Virginia-based Hooker Furniture
Corp., said on a Dec. 5 conference call with analysts. “We’ve
expanded our workforce by about 5 percent to date and anticipate
another 5 percent expansion in the coming months.”

Insurance Career

Valerie Epps of Atlanta, who lost a part-time retail job in
November, said she is “optimistic” she can return to her prior
career in real estate and insurance now that the housing market
is improving in the area.

“In the past, the market wasn’t very good in real estate
or insurance, and they are so tied together,” said Epps, 45.
“It’s all now building back up. You can see a turnaround. I do
see companies hiring, slowly.”

The administration of President Barack Obama used the
report to push for an extension of tax cuts for middle-income
Americans as well as a program to help homeowners refinance
their mortgages.

“It is critical that we continue the policies that are
building an economy that works for the middle class,” Alan
Krueger, chairman of Obama’s Council of Economic Advisers, said
in a statement.

Obama is also pushing for higher tax rates for the top 2
percent of earners, a proposal Republicans reject while pressing
for deeper cuts in social programs. Failure to come to an
agreement would mean more than $600 billion in tax increases and
spending cuts take effect automatically next year.

Economists’ Outlook

Economists were forecasting the jobs report would show
Sandy depressed payrolls. Before today’s numbers, Nomura
Securities International Inc. projected the storm would reduce
payrolls by 45,000, while UBS Securities LLC and Deutsche
Bank Securities Inc. put the fallout at 150,000.

While the Labor Department said Sandy didn’t
“substantively impact” the data, its poll of households showed
that 369,000 people were not at work because of bad weather
during the survey week. The average of the last 10 Novembers was
70,000 in the survey, which is used to calculate the jobless
rate.

The storm left about 8 million homes and businesses without
power for days after making landfall in New Jersey on Oct. 29.
The 26 counties designated as major disaster areas after the
storm had an average 1,301 labor force participants per square
mile, about 30 times the average labor force density for the
U.S. in 2011, according to the Labor Department.

Restaurant Demolished

Rafael Landi, 47, lost his job in Jersey City, New Jersey
as an executive chef and general manager of Surf City, a
waterfront restaurant that was demolished by the storm.

“It’s a complete loss because the place was entirely made
of wood,” Landi said of the restaurant, which faced Liberty
Harbor. “That whole area was just completely destroyed.” Landi
said he is working part-time as he looks for a full-time job.

A rebound in auto purchases after Sandy signals carmakers
and dealers may continue to boost employment. Industry sales of
cars and light trucks rose to 15.5 million at an annual rate in
November, the best pace since February 2008, according to Ward’s
Automotive Group.

Today’s report showed a decline in the share of working-age
people in the labor force, helping explain why the unemployment
rate dropped. The so-called participation rate fell to 63.6
percent from 63.8 percent in the prior month.

The unemployment rate in November was forecast to stay at
7.9 percent, according to the survey median.

Factories, Construction

Among industries, factory payrolls decreased by 7,000 in
November as job losses in food manufacturing and chemicals more
than offset gains at automakers. Employment at construction
companies dropped by 20,000 workers and increased by 169,000 at
private service-providers.

Citigroup Inc. is among companies cutting back. The New
York-based bank announced this week it will eliminate more than
11,000 jobs and pull back from some emerging markets to drive
down costs as revenue dries up.

Some companies say hiring and investment are being held
back on concern growth is cooling globally and U.S. lawmakers
will fail to reach agreement on reducing the budget deficit.

“We’re expecting the same sort of a slow-growth
environment, that’s our best view of 2013,” Fredrik Eliasson,
chief financial officer of CSX Corp., the largest eastern U.S.
railroad, said on a Nov. 28 teleconference with analysts.
“There are a lot of uncertainties out there in the world at
this point between what’s going on here with the fiscal cliff
and between Europe and China.”

Federal Reserve officials meeting next week are considering
whether to step up easing to stimulate the economy and trim the
jobless rate.

“Although the economy continues to expand, we must grow
faster if we are to put all of our jobless workers and idle
businesses back to work,” William C. Dudley, president of the
Federal Reserve Bank of New York, said in a Nov. 29 speech. He
called the unemployment rate “unacceptably high.”